Cocoa Prices Hit 32-Year High

NEW YORK (TheStreet) -- Cocoa futures leaped to a 32-year high Friday as a disputed presidential election continued to rock the world's number one cocoa producing nation.

Cocoa prices for May delivery settled up $61, or 1.8% at $3,499 a metric ton. Cocoa traded as high as $3,511 a metric ton Friday, hitting a 32-year high for a most actively-traded contract, according to Bloomberg data.

The Ivory Coast continues to be embroiled in political turmoil. The conflict involves Laurent Gbagbo, a ten-year incumbent who refuses to step down, and Alassane Ouattara, who declared victory during the country's 2010 presidential elections, and wants Gbagbo to formally resign.

On Jan. 23, Ouattara ordered a cocoa export ban to restrict the flow of funds to Gbagbo. The action was supported by both African and Western leaders who believe that Ouattara is president-elect and that Gbagbo must step down.

Quattara indicated that he intends to extend the cocoa export ban for another 30 days if Gbagbo continues his resistance. Rodger Wegner, the secretary general of the German Cocoa Trade Association has expressed concern about the impact an extension of the ban would have on already tight cocoa supplies.

There's also the risk that cocoa kept in storage could begin to deteriorate, PFGBEST's analyst Robin Rosenberg pointed out in a report.

"Many feel that civil war is a very good possibility if Gbagbo refuses to abdicate what he seems to think is his throne," he added.